Wednesday, September 21, 2011

Battle of the "Bays": Tradebay vs. eBay

Does an intent-to-use trademark applicant, faced with a trademark office opposition proceeding, have the right to seek declaratory relief in federal court? Or, does the fact that the applicant has not yet used the mark in commerce prevent a federal court from exercising jurisdiction?

Those are the legal question a federal court in the District of Nevada will have to answer in Tradebay v. eBay, Case No. Case 2:11-cv-00702-ECR -PAL.

This dispute began almost two years ago when, on January 6, 2009, Tradebay filed a trademark application with the United States Patent and Trademark Office for the mark TRADEBAY for various services including "computerized online ordering" and "operating online marketplaces for seller and buyers of goods and/or services."

When Tradebay's trademark was approved by the trademark office and published for opposition, eBay immediately opposed the mark claiming that consumers would confuse Tradebay and eBay. In support of this opposition, eBay cites Perfumebay.com Inc. v. eBay Inc., 506 F3d 1165 (9th Cir., Nove. 5, 2007) where the Ninth Circuit Court of Appeals stated that the term "BAY" was the dominant portion of the eBay mark. From this ruling, eBay argues that any "generic" + BAY mark in the internet marketplace space is likely to cause confusion and dilute eBay's distinctive mark.

After the opposition was filed, on May 3, 2011, Tradebay filed a declaratory relief action in the United States District Court, District of Nevada. Tradebay wanted a federal court to make the determination as to whether its mark, Tradebay, was likely to be confused with the famous eBay mark. The Trademark Trial and Appeal Board proceeding was thereafter stayed in light of the District Court lawsuit.

On June 28, 2011, eBay filed a motion to dismiss Tradebay's District Court lawsuit alleging that no case or controversy existed for the court to decide. The motion argues that dismissal pursuant to Fed. R. Civ. P. 12(b)(6) is the appropriate remedy as no trademark infringement can exist when Tradebay has not yet used the Tradebay mark in commerce.

Courts enforcing Rule 12(b)(6) curtail this risk by weeding out complaints that fail to give rise to a plausible inference of harm to the plaintiff. Neither eBay nor the Court should be required to expend the resources necessary to litigate the merits of claims of trademark infringement and dilution and unfair competition based on nothing more than vague and conclusory allegations that fail to evince the specific and concrete steps to use the mark that might give rise to a controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. Dismissal is the appropriate remedy here.

Tradebay filed an opposition to the motion on August 2, 2011, arguing that the "case or controversy" standard has been met and pointing out that as early as January 30, 2009 Tradebay received a cease and desist letter from eBay accusing it of infringing and diluting eBay's trademark rights.

Tradebay’s complaint presents an "actual controversy" within the meaning of the caselaw. Specifically, almost immediately after Tradebay filed its trademark application, eBay sent a cease and desist letter. If Tradebay refused eBay's demands, eBay threatened to "take whatever actions eBay deems necessary to protect its rights." Exhibit 2-A. eBay reaffirmed the identical threat a few days later. Exhibit 2-B. Once Tradebay’s application was accepted for publication, eBay opposed it in the USPTO. Exhibit 3-A.

In its reply brief filed August 25, 2011, eBay argues again that no case or controversy exists as Tradebay has not taken any concrete steps to actually use its Tradebay mark, such as developing a product line, conducting market research, or creating packaging and advertising.

Tradebay makes no attempt to show that it has alleged, let alone actually undertaken, any concrete steps to actually use the TRADEBAY mark in connection with any goods or services. At best, Tradebay has alleged nothing more than a vague and indefinite desire to use the TRADEBAY mark at some future date. That does not come close to showing a real and immediate controversy. Tradebay's utter failure to allege the requisite concrete steps can only lead to the conclusion that it has not engaged in any such activity. Under these circumstances, it would be a waste of the Court's (and eBay's) time and resources to render what would amount to an impermissible advisory opinion as to whether activities Tradebay may or may not undertake in the future would infringe or dilute eBay's trademarks.

Under the facts in this case, eBay argues that Tradebay is simply requesting that the court issue an improper advisory opinion rather than settle an actual trademark infringement dispute involving two competing marks being used in commerce.

The briefing on this issue is now closed and an order from the court is expected within the next ninety days. This ruling will be an interesting one to watch.

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